DIGESTS OF LABOR CASES

DECIDED BY THE
SUPREME COURT ON
MAY 2009
SOUTH DAVAO DEVELOPMENT CO.

VS. GAMO ET AL.

G.R. No. 171814, May 8, 2009

PEOPLES BROADCASTING (BOMBO RADYO PHILS.)

VS.
G.R. No. 179652, May 8, 2009

CHARTER CHEMICAL

SECRETARY

AND COATING CORP. VS.

G.R. No. 163891, May 21, 2009

TAN

ET AL.

GSIS VS. VICENCIO

G.R. No. 176832, May 21, 2009
PEOPLE VS. ABORDO
G.R. No. 179934, May 21, 2009
TELECOMMUNICATIONS DISTRIBUTORS

VS.
G.R. No. 174981, May 25, 2009

GARRIEL

SAN MIGUEL CORPORATION

VS. NLRC
G.R. No. 153983, May 26, 2009

LABOR LAW I
CESARIO A. AZUCENA, JR.
SUBMITTED BY:
CALIDA, MARK JOREL O.
3B 2009-2010

SOUTH DAVAO DEVELOPMENT CO.

1

VS.

GAMO

OF

ET AL.

LABOR

G.R. No. 171814, May 8, 2009

FACTS:
South Davao Development Company (SDDC) is the operator of a coconut and mango farm in
Davao Oriental and Davao del Sur. In 1963, SDDC hired Sergio Gamo (Gamo) as a foreman.
Sometime in 1987, SDDC appointed Gamo as a copra maker contractor. Some of the copra
workers of SDDC were later transferred by SDDC to Gamo as his copraceros.
From 1987 to 1999, Gamo and SDDC entered into a profit-sharing agreement wherein 70% of the
net proceeds of the sale of copra went to SDDC and 30% to Gamo. In this arrangement, the
copra workers were paid by Gamo from his 30% share. Subsequently, SDDC wanted to
standardize payments to its contractors in its coconut farms. However, SDDC and Gamo were
not able to agree on a new payment scheme. Despite this, Gamo and his copraceros started to
do harvesting work. SDDC, upon notice, told them to stop. Eventually, Gamo and SDDC agreed
that Gamo may continue with the harvest provided that it would be his last contract with
SDDC. Gamo suggested to SDDC to look for a new contractor since he was not amenable to
the new payment scheme that it proposed.
Since SDDC did not renew the contract of Gamo, the latter and his copra workers alleged that
they were illegally dismissed. The labor arbiter dismissed the complaint ruling that there was no
employer-employee relationship between SDDC and Gamo et al. The NLRC shared the position
with the labor arbiter and ruled that the nature of the job of Gamo et al. could not result in an
employer-employee relationship. On the other hand, the Court of Appeals ruled that an employeremployee relationship existed.
SSDCs alleges that the current business practice 1 in the coconut industry treats copraceros as
independent contractors.
ISSUES:
(1) Whether or not the Court of Appeals failed to take judicial notice of the accepted practice of
independent contractors in the coconut industry.
(2) Whether or not Gamo is an independent contractor.
(3) Whether or not there is an employer-employee relationship between SDDC and Gamo et al.
HELD:
(1) NO. According to Expertravel vs. CA,2 matters of judicial notice have three material requisites:
(i) the matter must be one of common and general knowledge; (ii) it must be well and
authoritatively settled and not doubtful or uncertain; and (iii) it must be known to be within the
limits of the jurisdiction of the court.
An invocation that the Court take judicial notice of certain facts should satisfy the requisites, a
mere prayer for its application shall not suffice. In this case, the Court cannot take judicial notice
of the alleged business practices in the copra industry. The record is bereft of any indication that
the matter is of common knowledge to the public and that it has the characteristic of notoriety.
(2) NO. In Escario v. NLRC,3 it was held that to establish the existence of an independent
contractor, the following conditions must exist: (i) the contractor carries on an independent
business and undertakes the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except to the result thereof;
1

These practices include: (i) that copra making activities are done quarterly; (ii) that the workers can
contract with other farms; and (iii) that the workers are independent from the land owner on all work
aspects.
2
G.R. No. 152392, May 26, 2005
3
G.R. No. 124055, June 8, 2000

and (ii) the contractor has substantial capital or investments in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of his
business.
The Implementing Rules of the Labor Code defines investment as tools, equipment, implements,
machineries and work premises, actually and directly used by the contractor or subcontractor in
the performance or completion of the job, work, or service contracted out. The investment must
be sufficient to carry out the job at hand.
Gamo and the copra workers did not exercise independent judgment in the performance of their
tasks. The tools used by Gamo and his copra workers like the karit, bolo, pangbunot, panglugit
and pangtapok are not sufficient to enable them to complete the job. Reliance on these primitive
tools is not enough. In fact, the accomplishment of their task required more expensive
machineries and equipment, like the trucks to haul the harvests and the drying facility, which
SDDC owns.
(3) YES. In order to determine the existence of an employer-employee relationship, the Court has
frequently applied the four-fold test: (i) the selection and engagement of the employee; (ii) the
payment of wages; (iii) the power of dismissal; and (iv) the power to control the employees
conduct, or the so called control test, which is considered the most important element.
From the time the copraceros were hired by SDDC up to the time that they were reassigned to
work under Gamos supervision, their status as SDDCs employees did not cease. Likewise,
payment of their wages was merely coursed through Gamo. As to the power of control, it is
sufficient that the power to control the manner of doing the work exists, it does not require the
actual exercise of such power.
In this case, SDDC was exercising its power of control when it transferred the copra workers from
their previous assignments to work as Gamos copraceros. It was also in the exercise of the same
power that SDDC put Gamo in charge of the copra workers although under a different payment
scheme. Thus, it is clear that an employer-employee relationship has existed between SDDC and
Gamo et al. since the beginning and such relationship did not cease despite their reassignments
and the change of payment scheme.

PEOPLES BROADCASTING (BOMBO RADYO PHILS.)

VS. SECRETARY OF LABOR
G.R. No. 179652, May 8, 2009

FACTS:
Jandeleon Juezan (Juezan) filed a complaint before the DOLE against Bombo Radyo Phils.
(Bombo Radyo) for illegal deduction, non-payment of service incentive leave, 13th month pay,
premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of
wages and non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the
DOLE conducted a plant level inspection. The Labor Inspector in his report wrote,
Management representative informed that (Juezan) complainant is a drama talent hired on a per
drama participation basis hence no employer-employer relationship existed between them. As
proof of this, management presented photocopies of cash vouchers, billing statement,
employments of specific undertaking, etc. The management has no control of the talent if he
ventures into another contract with other broadcasting industries.

The DOLE Regional Director issued an order ruling that Juezan is an employee of Bombo Radyo,
and that Juezan is entitled to his money claims. Bombo Radyo sought reconsideration claiming
that the Regional Director gave credence to the documents offered by Juezan without examining
the originals, but at the same time the Regional Director missed or failed to consider Bombo
3

Radyos evidence. The motion for reconsideration was denied. On appeal, the Acting DOLE
Secretary dismissed the appeal on the ground that Bombo Radyo did not post a cash or surety
bond and instead submitted a Deed of Assignment of Bank Deposit.
Bombo Radyo elevated the case to the Court of Appeals, claiming that it was denied due process
when the DOLE Secretary disregarded the evidence it presented and failed to give it the
opportunity to refute the claims of Juezan. It maintained that no employer-employee relationship
had ever existed between it and Juezan because it was the drama directors and producers who
paid, supervised and disciplined him. It also added that the case was beyond the DOLEs
jurisdiction because Juezans claim exceeded P5,000.
The Court of Appeals held that the DOLE Secretary had the power to order and enforce
compliance with labor standard laws irrespective of the amount of individual claims because the
limitation imposed by Art. 29 of the Labor Code had been repealed by R.A. 7730.
Bombo Radyo argues that the NLRC (not the DOLE Secretary) has jurisdiction over Juezans
claim, in view of Arts. 217 and 128 of the Labor Code. It adds that the Court of Appeals
committed grave abuse of discretion when it dismissed their appeal without delving on the issue
of employer-employee relationship.
ISSUE: Whether or not the Secretary of Labor has the power to determine the existence of an
employer-employee relationship.
HELD: NO. Art. 128 (b) of the Labor Code, as amended by R.A. 7730 reads:
Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment
or his duly authorized representatives shall have the power to issue compliance orders to give
effect to the labor standards provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial safety engineers made in the
course of inspection.

The provision is explicit that the visitorial and enforcement power of the DOLE comes into play
only in cases when the relationship of employer-employee still exists. This clause signifies that
the employer-employee relationship must have existed even before the emergence of the
controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (i) where
the employer-employee relationship has ceased; and (ii) where no such relationship has ever
existed.
The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of
Labor Standards Cases issued by the DOLE Secretary. It reads:
Where employer-employee relationship no longer exists by reason of the fact that it has already
been severed, claims for payment of monetary benefits fall within the exclusive and original
jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint, it can be ascertained
that employer-employee relationship no longer exists, the case, whether accompanied by an
allegation of illegal dismissal, shall immediately be endorsed by the Regional Director to the
appropriate branch of the National Labor Relations Commission (NLRC).

The law accords a prerogative to the NLRC over the claim when the employer-employee
relationship has terminated or such relationship has not arisen at all. The existence of an
employer-employee relationship is a matter which is not easily determinable from an ordinary
inspection because the elements of such a relationship are not verifiable from a mere ocular
examination. The intricacies and implications of an employer-employee relationship demand that
the level of scrutiny should be far above the superficial. While documents, particularly
documents found in the employers office are the primary source materials, what may prove
decisive are factors related to the history of the employers business operations, its current state
4

as well as accepted contemporary practices in the industry. More often than not, the question of
employer-employee relationship becomes a battle of evidence, the determination of which
should be comprehensive and intensive and therefore best left to the specialized quasi-judicial
body of the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow
has to make a determination of the existence of an employer-employee relationship. However,
such determination cannot be coextensive with the visitorial and enforcement power itself. Such
is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor
standards provisions. The determination of the existence of employer-employee relationship is
still primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Art. 128, two important questions must be
resolved: (i) Does the employer-employee relationship still exist, or alternatively, was there ever
an employer-employee relationship to speak of; and (ii) Are there violations of the Labor Code or
of any labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation
on the power of the Secretary of Labor, one which the legislative branch is entitled to impose.
The rationale underlying this limitation is to eliminate the prospect of competing conclusions of
the Secretary of Labor and the NLRC. If the Secretary of Labor proceeds to exercise his visitorial
and enforcement powers absent the first requisite, his office confers jurisdiction on itself which it
cannot otherwise acquire.
Nevertheless, a mere assertion of absence of employer-employee relationship does not deprive
the DOLE of jurisdiction over the claim. At least a prima facie showing of such absence of
relationship, as in this case, is needed to preclude the DOLE from the exercise of its power.
Without a doubt, Bombo Radyo, since the inception of this case had been consistent in
maintaining that Juezan is not its employee. A preliminary determination, based on the evidence
offered and noted by the Labor Inspector during the inspection as well as submitted during the
proceedings before the Regional Director puts in genuine doubt the existence of employeremployee relationship. From that point on, the prudent recourse on the part of the DOLE should
have been to refer Juezan to the NLRC for the proper dispensation of his claims. Furthermore,
even the evidence relied on by the Regional Director in his order are mere self-serving
declarations of Juezan, and hence cannot be relied upon as proof of employer-employee
relationship.

CHARTER CHEMICAL

AND COATING CORP. VS.

G.R. No. 163891, May 21, 2009

TAN

ET AL.

FACTS:
Herbert Tan and Amalia Sonsing (Tan et al.) were employees of Charter Chemical and Coating
Corporations Davao branch (Charter Chemical). Tan et al. were placed under preventive
suspension for their failure to satisfactorily explain the discrepancies in the stock inventory at the
Davao depot warehouse. They were also asked to explain the alleged dishonesty in the punching
of their time cards. Charter Chemical advised Tan et al. that they were being terminated from the
service. Hence, they filed a complaint for illegal dismissal and money claims against Charter
Chemical.

On 18 January 2001, the labor arbiter ruled in favor of Tan et al. and declared the dismissal
illegal.
On 7 February 2001, Charter Chemical received a copy of the labor arbiters decision.
5

On 16 February 2001, Charter Chemical sent its notice of appeal to the NLRC through Luzon
Brokerage Corporation (LBC).
On 26 February 2001, the NLRC received the notice of appeal.

The NLRC dismissed Charter Chemicals appeal for having been filed beyond the 10-day
reglementary period. The NLRC granted the motion for reconsideration and gave due course to
Charter Chemicals appeal. Subsequently, the NLRC dismissed Tan et al.s complaint for illegal
dismissal. The Court of Appeals granted Tan et al.s petition and ruled that the NLRC acted with
grave abuse of discretion in admitting Charter Chemicals belated appeal.
Charter Chemical argues that the NLRC acted within its jurisdiction when it relaxed the
application of the rules on appeal in labor cases because the failure to comply with the
reglementary period to appeal was brought about by LBCs difficulty in finding the new address
of the NLRC. There was substantial compliance with the rules on appeal as the notice of appeal
was consigned for delivery to LBC on 16 February 2001 or three days before the expiration of the
period to appeal. Petitioner also insists that the date of delivery to LBC was the date of filing of
its notice of appeal.
Issue: Whether or not Charter Chemicals appeal was valid.
HELD: NO. Art. 223 of the Labor Code, the governing law on the timeliness of an appeal from the
decisions, awards or orders of the Labor Arbiter, is explicit that the aggrieved party has 10
calendar days from receipt thereof to appeal to the NLRC. Accordingly, this 10-day reglementary
period to perfect an appeal is mandatory and jurisdictional in nature. The failure to file an appeal
within the reglementary period renders the assailed decision final and executory and deprives
the appellate court of jurisdiction to alter the judgment, much less to entertain the appeal.
There is no dispute that Charter Chemical received a copy of the Labor Arbiters decision on 7
February 2001. Thus, pursuant to Art. 223 of the Labor Code, Charter Chemical had only until 17
February 2001, the 10th calendar day from 7 February 2001, within which to file an appeal.
However, as 17 February 2001 fell on a Saturday, petitioner had until the next working day, or
until 19 February 2001, to file its appeal. On 16 February 2001, petitioner consigned its notice of
appeal to LBC for delivery to the NLRC. The NLRC received the notice of appeal only on 26
February 2001.
In Benguet Electric Cooperative, Inc. v. NLRC,4 it was held that the date of delivery of pleadings
to a private letter-forwarding agency is not to be considered as the date of filing thereof in court,
and that in such cases, the date of actual receipt by the court, and not the date of delivery to the
private carrier, is deemed the date of filing of that pleading.
In this case, Charter Chemical availed of the services of LBC, a private carrier, to deliver its
notice of appeal to the NLRC. Had it sent its notice of appeal by registered mail, the date of
mailing would have been deemed the date of filing with the NLRC. Therefore, the date of actual
receipt by the NLRC of the notice of appeal, and not the date of delivery to LBC, is deemed to be
the date of the filing of the notice of appeal. Since the NLRC received petitioners notice of
appeal on 26 February 2001, the appeal was clearly filed out of time.

GSIS

VS. VICENCIO
G.R. No. 176832, May 21, 2009

FACTS:
Judge Vicencio entered government service in 1964 as a Legal Researcher of the Development
Bank of the Philippines (DBP). After passing the bar, he became an Assistant Attorney. He was
4

G.R. No. 89070, May 18, 1992

promoted and held his position until his retirement from in 1985. In 1987, he re-entered
government service as Assistant Fiscal for the City of Manila. In 1992, he was appointed as an
MTC judge. In 1999, he was appointed as an RTC Judge in Manila and served as such until his
death in 2001.
Records show that on November 30, 2000, Judge Vicencio suffered loss of consciousness due to
pericardial effusion. He was admitted at the Makati Medical Center where he was diagnosed with
Adenocarcinoma of the Left Lung with Metastases to Pedicardium. He underwent intravenous
chemotherapy. On May 31, 2001, Judge Vicencio died. Per his Death Certificate, the immediate
cause of his death was Cardiopulmonary Arrest, and the antecedent cause was T/C Fatal
Arrythmia. No underlying cause of death was indicated therein.
His widow applied for the death benefits of her late husband with GSIS but her application was
denied on the ground that the illness which caused the death is not considered an occupational
disease and there is no showing that his work as RTC Judge has increased his risk of contracting
said ailment. His widow appealed with the Employees Compensation Commission (ECC) but
the same was dismissed. The Court of Appeals reversed and set aside the Decision of the ECC
and ordered GSIS to grant the claim for the death benefits of Judge Vicencio.
GSIS argues that based on the medical records, Judge Vicencios underlying cause of death was
lung cancer. The cause of death stated in his Death Certificate, Cardiopulmonary Arrest T/C Fatal
Arrythmia, was a mere complication of his lung cancer. However, the attending physician did not
fill up the portion on the Death Certificate to indicate that the underlying cause (which was left in
blank) was lung cancer. Lung cancer is not an occupational disease listed under the law. Pursuant
to Annex A of the Amended Rules on Employees Compensation, lung cancer is occupational
only with respect to vinyl chloride workers and plastic workers.
ISSUE: Whether or not the widow of Judge Vicencio can claim the death benefits of Judge Vicencio
under P.D. 626.
HELD: YES. P.D. No. 626, as amended, defines compensable sickness as any illness definitely
accepted as an occupational disease listed by the Commission, or any illness caused by
employment subject to proof by the employee that the risk of contracting the same is increased
by the working conditions. For sickness and the resulting death of an employee to be
compensable, the claimant must show either: (i) that it is a result of an occupational disease
listed under Annex "A" of the Amended Rules on Employees' Compensation with the conditions
set therein satisfied; or (ii) if not so listed, that the risk of contracting the disease is increased by
the working conditions.
The Death Certificate of Judge Vicencio clearly indicates that the cause of his death is
Cardiopulmonary Arrest T/C Fatal Arrythmia. Whether, however, the same was a mere
complication of his lung cancer as contended by GSIS or related to an underlying cardiovascular
disease is not established by the records of this case and, thus, remains uncertain.
P.D. No. 626 is a social legislation whose primordial purpose is to provide meaningful protection
to the working class against the hazards of disability, illness and other contingencies resulting in
the loss of income. Thus, the official agents charged by law to implement social justice
guaranteed by the Constitution should adopt a liberal attitude in favor of the employee in
deciding claims for compensability especially where there is some basis in the facts for inferring
a work-connection with the illness or injury, as the case may be. It is only this kind of
interpretation that can give meaning and substance to the compassionate spirit of the law as
embodied in Art. 4 of the New Labor Code which states that all doubts in the implementation and
interpretation of the provisions of the Labor Code including their implementing rules and
regulations should be resolved in favor of labor.
7

Guided by this policy, Cardiopulmonary Arrest T/C Fatal Arrythmia should be considered as a
cardiovascular disease - a listed disease under Annex A of the Amended Rules on Employees
Compensation. Considering the stress and pressures of work inherent in the duties of a judge and
it was established that Judge Vicencio was doing work in his office a few days immediately before
the moment of his cardiac arrest, the requisites for cardiovascular disease to be compensable
under paragraph (r) of ECC Resolution No. 432 are satisfied in the case at bar.
Granting, however, that the only cause of Judge Vicencios death is lung cancer, the working
conditions of the late Judge Vicencio contributed to its development. While lung cancer is
occupational only with respect to vinyl chloride workers and plastic worker, this will not bar a
claim for benefits under the law if the complainant can adduce substantial evidence that the risk
of contracting the illness is increased or aggravated by the working conditions to which the
employee is exposed to.
It is well-settled that the degree of proof required under P.D. No. 626 is merely substantial
evidence. Medical opinion to the contrary can be disregarded especially where there is some
basis in the facts for inferring a work-connection. It is not required that the employment be the
sole factor in the growth, development or acceleration of a claimants illness to entitle him to the
benefits provided for. It is enough that his employment contributed, even if to a small degree, to
the development of the disease.
Judge Vicencios dealt with stressful daily work hours, and constant and long-term contact with
dusty and voluminous records. His workplace at the Manila City Hall had long been a place with
sub-standard offices of judges and prosecutors overflowing with records of cases covered up in
dust and are poorly ventilated. All these, taken together, necessarily contributed to the
development of his lung illness. Judge Vicencio worked in the government for a total of 37 years.
He is survived by his widow and a daughter. Their claim for death benefits has been pending
since 2001. As the public agency charged by law in implementing P.D. 626, GSIS should not lose
sight of the fact that the constitutional guarantee of social justice towards labor demands a
liberal attitude in favor of the employee in deciding claims for compensability.

PEOPLE VS. ABORDO

G.R. No. 179934, May 21, 2009
FACTS:
The prosecution established that sometime in January, September and December of 1994,
Erlinda Abordo (Abordo) recruited several persons for possible employment abroad as either
domestic helpers or security guards. They were able collected sums of money as placement fee
upon their assurance that they could soon leave for abroad.
The Dagupan District Officer of the DOLE issued certifications stating that the accused were not
included in the POEAs list of those licensed to recruit in Pangasinan. The accused denied the
charges against them. In their brief, the accused claimed that they could not be held liable for
estafa under Art. 315, 2(a) of the Revised Penal Code since the element of deceit was not
established. They alleged that they received the placement fees on behalf of the travel agency
and argued that it was unclear whether the false statements or fraudulent representations were
made prior to or simultaneously with the delivery of the money by the complainants. The RTC
found Abordo guilty beyond reasonable doubt for the crime of illegal recruitment in large scale
defined and penalized under the Labor Code and Estafa under the Revised Penal Code.
The Court of Appeals held that the prosecution sufficiently established the accuseds guilt for
illegal recruitment. The accused cooperated with each other in convincing complainants to pay
placement fees for employment abroad. The act of the accused of recruiting complainants for
8

employment abroad without the necessary license from the POEA constitutes the offense of
illegal recruitment. The Court of Appeals modified the penalties imposed on the accused as each
information involved only one complainant. The accused cannot be convicted for illegal
recruitment in large scale based on several informations each filed by only one complainant.
Since the accused were prosecuted under several informations for different complainants, the
penalty imposed should be for each information. To convict the accused of illegal recruitment in
large scale, there must be one information that must include all the complainants. Otherwise, the
accused should be held liable only for simple illegal recruitment.
ISSUE: Whether or not the accused are guilty of illegal recruitment in large scale.
HELD: NO. The Court of Appeals did not err in holding that the accused are guilty of simple illegal
recruitment only, modifying the trial courts ruling that the accused are guilty of illegal
recruitment in large scale. Since the accused were prosecuted under several informations for
different complainants, the penalty imposed should be for each information charged. To convict
the accused for illegal recruitment in large scale, there must be one information that must
include all the complainants. Otherwise, the accused should be convicted only for simple illegal
recruitment.

TELECOMMUNICATIONS DISTRIBUTORS

VS.
G.R. No. 174981, May 25, 2009

GARRIEL

FACTS:
Raymund Garriel (Garriel) was a Customer Sales Assistant (CSA) of Telecommunications
Distributors Specialist, Inc. (TDSI). Garriel had direct access to company assets and property, in
terms of cash collections from subscribers and customers as well as goods and inventory to be
sold to subscribers and customers.
Three incidents triggered the filing of this case. The first two incidents were similar and involved
persons who through Garriel subscribed to mobile phone services and purchased a mobile phone
unit from TDSI. Garriel failed to make the subscriber sign a coverage waiver. A week later, Garriel
called them and asked them to just answer yes in case they were questioned by the company
regarding their application. It was later found out that the subscribers signatures in the coverage
were forged. In the third incident, a subscriber purchased a mobile phone unit from TDSI. Garriel
attended to him but did not issue an official receipt. It was later discovered that he sold a
defective mobile phone personally owned by him to the buyer who eventually demanded a
replacement. Garriel replaced the defective unit with a similar unit from one of TDSIs counters.
He thereafter attempted to influence his co-employee and fellow CSA, to declare a cash shortage
of P5,000 as he could not pay for the unit he filched to replace the defective phone sold.
Garriel was formally investigated and was later dismissed on grounds of serious misconduct and
loss of trust and confidence. He filed a complaint for illegal dismissal. The labor arbiter ruled that
Garriel was illegally dismissed and was awarded separation pay. TDSI appealed to the NLRC
which affirmed the labor arbiters findings, with the observation that due process was not
observed in dismissing Garriel. The Court of Appeals likewise affirmed the decision with
modification, it held that due process had been observed and awarded backwages in favor of
Garriel.
ISSUE: Whether or not TDSI violated Garriels right to due process.
HELD: NO. Garriel was given ample opportunity to explain and rebut the evidence against him. A
full adversarial hearing was not required. The essence of due process is simply the opportunity to
be heard. As applied in administrative proceedings, it is merely an opportunity to explain ones
side or an opportunity to seek a reconsideration of the action or ruling complained of.
9

As held in Perez v. Philippine Telegraph,5

After receiving the first notice apprising him of the charges against him, the employee may submit
a written explanation and offer evidence in support thereof and the sworn statements of his
witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a
representative or counsel. He may also ask the employer to provide him copy of records material
to his defense. His written explanation may also include a request that a formal hearing or
conference be held. In such a case, the conduct of a formal hearing or conference becomes
mandatory, just as it is where there exist substantial evidentiary disputes or where company rules
or practice requires an actual hearing as part of employment pretermination procedure.
This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code
reasonably implements the ample opportunity to be heard standard under Article 277 (b) of the
Labor Code without unduly restricting the language of the law or excessively burdening the
employer.
In sum, the following are the guiding principles in connection with the hearing requirement in
dismissal cases:
(i) Ample opportunity to be heard means any meaningful opportunity (verbal or written) given
to the employee to answer the charges against him and submit evidence in support of his
defense, whether in a hearing, conference or some other fair, just and reasonable way.
(ii) A formal hearing or conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when
similar circumstances justify it.
(iii) The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in the implementing rules and regulations.

TDSI complied with the twin-notice requirement. The notice dated October 17, 2000 served on
Garriel was the written notice specifying the charges against him. The subsequent notice dated
February 7, 2001 (notice of adjudication specifying therein the causes for respondents
termination and the decision to dismiss him) served as the written notice of termination. In view
of Garriels valid dismissal due to serious misconduct and loss of trust and confidence, he is not
entitled to separation pay.

SAN MIGUEL CORPORATION

VS. NLRC
G.R. No. 153983, May 26, 2009

FACTS:
William L. Friend, Jr. (Friend) was a route salesman of San Miguel Corporation (SMC) Bacoor
Sales Office for 10 years. His supervisor conducted an audit of his route on account of complaints
of the customers. These customers complained to the supervisor that Friend padded their
accounts in the total amount of P20,540.00. After the audit, the supervisor found reasonable
ground to hold him liable for misappropriation of company funds through falsification of private
documents. Friend was summoned to SMCs Canlubang Bottling Plant for investigation.
Friend later received a notice of termination from SMC which states that his services are being
terminated for misappropriation of company funds through falsification of company documents.
Company rules and regulations states that misappropriation of company funds is punishable by
discharge for the offense.
Friend filed a complaint for illegal suspension and illegal dismissal. The labor arbiter rendered a
decision ordering SMC to reinstate Friend. The NLRC reversed the labor arbiter.
5

G.R. No. 152048, April 7, 2009.

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SMC cites Article 282[18] of the Labor Code, specifically loss of trust and confidence as the
ground for validly dismissing Friend. Under the law, loss of confidence must be based on fraud
or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative.
ISSUE: Whether or not Friend was terminated lawfully
HELD: NO. In termination cases, the employer bears the burden of proving that the dismissal of
the employee is for a just or an authorized cause. Failure to dispose of the burden would imply
that the dismissal is not lawful, and that the employee is entitled to reinstatement, back wages
and accruing benefits.
Company Rule No. 16 of SMCs Disciplinary Actions for Violations of Company Rules specifically
provides that Misappropriation of Company Funds/ Withholding Funds Due to the Company is
punishable with discharge even for the first offense. Nevertheless, the records never showed that
there was misappropriation of funds that benefited anybody which warranted the dismissal of
Friend for the first offense. Friend admittedly committed padding of accounts and/or paper
renewal, which he claims to be a practice among salesmen and such claim was not disputed by
SMC.
The paper renewal committed by Friend may be considered as falsification, but such paper
renewal did not amount to misappropriation that could justify outright dismissal for the first
offense. Otherwise, the company rules would not have separated these two offenses under Rule
Nos. 15 and 16. Although Friend did in fact violate company Rule No. 15 by falsifying company
records and documents through paper renewal, such falsification has to be qualified, that such
falsification must benefit the offender or somebody else. According to the NLRC, the benefit to
Friend was a boost to his performance level and continuing employment while according to
the Labor Arbiter, the benefit to the customers was it prolonged the time for them to pay their
account to SMC. Such are hardly the benefits obtained that would warrant the supreme penalty
of dismissal for the first offense.
SMC utterly failed to establish that Friend or somebody pecuniarily or materially benefited from
the falsification through paper renewal committed by him that could have warranted his
dismissal for the first offense. Neither was there clear and convincing evidence that SMC
suffered any material loss by the act of paper renewal. The penalty of dismissal is too severe a
penalty for the offense committed. Firstly, there is no showing that Friends service record was
replete with offenses. It appears that this is the first time he was charged of violation of company
rule. Secondly, there is no convincing evidence that he materially benefited from the acts
committed. Thirdly, SMC did not suffer from any damage or losses by reason thereof.
The right of an employer to dismiss an employee on account of loss of trust and confidence must
not be exercised whimsically. To countenance an arbitrary exercise of that prerogative is to
negate the employees constitutional right to security of tenure. The employer must clearly and
convincingly prove by substantial evidence the facts and incidents upon which loss of confidence
in the employee may be fairly made to rest; otherwise, the employees dismissal will be rendered
illegal.

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